Corporate & Securities Law

Res judicata of US class action judgments

By Werner R. Kranenburg

Weil Gotshal & Manges LLP has published its annual 10b-5 Guide (2007) this summer, with thanks to Paul A. Ferrillo for this submission. It includes discussion of two cases that have featured here, one of which is Borochoff v. GlaxoSmithKline PLC (p.156). In that case the judge did not appoint as lead plaintiff the movant with the largest combined loss, a group of German investors, due to the concern whether “the foreign courts will not enforce a decision in favor of [defendant] against foreign plaintiffs in the class.? In the case of Vivendi Universal S.A. (p.175) the court included some foreign countries into the classification and specifically excluded others over the same concern. (Also see In re Rhodia S.A. Sec. Litig., p.195.)

In his 2007 paper Recognition and Res Judicata of U.S. Class Action Judgments in European Legal Systems, Andrea Pinna (LinkedIn) of French law firm Darrois Villey Maillot Brochier (no URL) adresses exactly that concern, with thanks to Prof. Dr. Ianika M. Tzankova for her notifying me of the paper. Pinna actually concludes that his “analysis seems to suggest that the hostility of European legal systems towards granting Res Judicata effect to US class action judgments is progressively declining… [as a] consequence of a general acceptance of the necessity of renovating the old-continent civil procedures with tools allowing the consolidation of individual claims in collective claims.” (p.29 of 31)

Since the paper was published, more ‘old-continent’ jurisdictions have adopted collective claim procedures. DLA Piper’s article Global Realm of Securities Class Actions, with thanks to The 10b-5 Daily, highlights some of these procedures in its discussion of “the evolution of the class action device for securities claims in foreign jurisdictions.”

(Also of interest in a wider context is Prof. Samuel P. Baumgartner’s paper How Well Do U.S. Judgments Fare in Europe?, published just a few weeks after Pinna’s paper.)

Full post as published by With Vigour and Zeal on November 17, 2008 (boomark / email).